How Much Can I Earn from Cloud Mining? How much you earn from cloud mining is entirely dependant on the cloud mining service you use, how much you invested, the difficulty of cryptocurrency, price of cryptocurrency and all other fees.
Bitcoin is the most popular cryptocurrency right now. The popularity of bitcoin and cryptocurrencies is ever-increasing. As more people join the crypto world, they all wonder how to earn from this opportunity. There is no one way to earn cryptocurrency. You can mine, cloud mine, trade, HODL, or work for cryptocurrencies.
However, in this article, my focus is on cloud mining. More and more people are opting into cloud mining as an alternative to mining with their own mining rig. Before I explain how much you can earn from cloud mining, first some background information on cloud mining.
What is Cloud Mining?
Cloud mining refers to the use of remote datacenters with shared processing power to mine cryptocurrencies. This enables you to mine cryptocurrencies without having to manage hardware. When you purchase a mining contract with a mining company, they will mine cryptocurrencies for you. These companies are housed with a large number of mining rigs and/or dedicated mining equipment (ASICs) to provide services to a large number of customers.
These companies charge a fee for cloud mining services and therefore the returns can be low to the customer. However, there are different types of cloud mining services:
Hosting – This is when the owner of the mining rig/ASIC rents their equipment to cryptocurrency miners.
Virtual Hosting – Creates a virtual private server and installs customer’s mining software.
Leasing – Leasing mining capacity of the server (Most popular method).
Simply put, what cloud mining does is connect mining equipment to the cryptocurrency network, successfully verify transactions of the network and add them to the blockchain. Adding these (blocks) to the blockchain involves solving a complex math problem. The first miner to solve this math problem is rewarded with cryptocurrency.
So, more hash power you have, more chances of you solving it first. However, if you join a mining pool (a group of cryptocurrency miners), there is a higher chance of your pool solving it first. However, the rewarded is then divided among the miners in the pool, based on their contributed hash power.
So, essentially, a cloud mining service does all these things for you and send earnings directly to your wallet, for a fee. Most cloud mining services have an estimate of how much you can expect to earn when you purchase hash power from them. In a sense, you are renting hash power from them.
Why would anyone cloud mine?
Cloud mining is one of the easiest ways to earn cryptocurrency. If you are new to cryptocurrency, it is a good way to test the waters of cryptocurrency. These are the reasons why cloud mining is so popular:
No electricity and various other costs: Your mining rig will consume so much electricity and dispense so much heat when mining. The result of this will be you paying high electricity fees and investing money on fans to cool your rig. A cloud mining service, on the other hand, does all these for you.
No maintenance, monitoring and setting up your rig: Building a mining rig can be difficult sometimes. If you have no experience building PCs, this will not come easy for you. Setting up your mining rig involves assembling your graphics cards, installing OS, creating wallets and various other things. You will also have to monitor your rig 24/7. Replace parts if it fails.
No purchase of expensive mining equipment: With cloud mining, you can invest as little as $10. Some cloud mining services like Eobot, allows you to buy mining contracts for very little investment. On the other hand, building your own mining rig will cost you in the thousands, at least.
Variety of coins: You can mine almost any major coin with cloud mining these days.
How Much Can I Earn from Cloud Mining?
There is no clear cut answer to this question. The mining profitability is entirely dependant on several factors. It is therefore important to understand these factors before determining profitability:
Cloud Mining Service You Use – This is the only factor you can control. The cloud mining service you use determines how big your ROI will be. Purchasing a cloud mining contract from a company will require some initial investment. You are essentially purchasing hash power, and choosing a coin to mine. Your contract will have an expiration date. Your ultimate goal is to cover your initial investment and other fees with your ROI, before the expiration date.
Mining Difficulty – It is important to keep an eye on the mining difficulty of the coin you are mining. When new miners join the network, the total hash power of the network increases. As a result, mining difficulty increases and your payout will be lowered. You can check cryptocurrency difficulty charts here.
Price of Cryptocurrency – The price of the coin you are mining can affect your ROI. If you are mining a coin that is gaining in value, you can expect a very good return on investment. However, it is also important to note that when a cryptocurrency gains in value, there will be new miners joining the network. When this happens, the difficulty of the network increases, and as a result, the payout will be lower.
Cloud Mining Fees – Cloud mining fees are very important to consider when estimating your profitability. These are usually small fees that are charged on a continues basis. These add up to a large amount before the expiration date. Some of the fees include withdrawal fees, miner fees and maintenance fees. Fees vary with the coin you mine. The cloud mining service you use will give the complete details of the fee structure.
How Much Can I Earn from Cloud Mining?
So, to estimate your earnings, you must know your hash rate, the coin you are mining, difficulty, price of the coin, and all the fees of the cloud mining service.
This is how you estimate:
- Go to Coinwarz Calculator and select the coin you are cloud mining.
- Input the hash power you purchased from the cloud mining service in the “hash rate” field.
- Input the amount you invested in cloud mining service in the “Hardware Cost” field.
- Set Power Cost ($/kWh) and Power (Watts) to zero (Difficulty and block reward is calculated automatically).
- Click Calculate.
- You will see the break-even date and a summary of your estimated earnings.
If your break-even day comes before your cloud mining contract expiration day, you can expect a positive ROI. However, now you have to deduct all the fees associated with cloud mining. These include maintenance fees, miner fees, withdrawal fees, and other fees (check your cloud mining provider).
After you deduct all these fees; if your estimated earnings in total are higher than the initial amount you invested in cloud mining, your ROI is positive. You can know exactly how much you are going to earn under current conditions. When I say current conditions, I mean mining difficulty, price of the coin and fixed fees of the cloud mining service.
I have broken down the above estimation into this equation:
Cloud Mining Profit = Amount of Cryptocurrency Earned via Cloud Mining – Initial amount invested in Cloud Mining – Fees
Important Note: Some cloud mining services do not adhere to the changes in mining difficulty. If it is a legit cloud mining service, your payout should constantly change with the changes in mining difficulty. If it is not a legit service, you will find that your payout gets lower and lower regardless of mining difficulty.
It is also important to note that some cloud mining services do not provide genuine payouts for the amount of hash power you purchased. If this is the case, your estimated earnings will be inaccurate. Avoid this type of cloud mining services.
Some cloud mining services have their own calculator to estimate earnings. You can quickly get the estimated earnings if you use their calculator as the fees are deducted for you automatically. You can also use the method explained above.
Are Your Earnings Guaranteed?
No. Cryptocurrency price, the difficulty, and cloud mining fees can change anytime. Some cloud mining contracts can get paused or suspended by the provider. This happens because the cost of mining can be higher than the earnings sometimes. If this happens, your ROI will be different. When you calculate earnings, it is only an estimate.
What is the Best Cloud Mining Service?
Before you invest in any cloud mining service, please read online reviews and make an informed decision. Not all cloud mining services are legit. These are few of the services I consider legit:
There is no way to know exactly how much you are going to earn from cloud mining. However, you can estimate earnings using various online tools. If you know all the factors that affect cloud mining profitability, you can make a clear assessment. It is also important to consider the risks associated with cloud mining.